Google (NASDAQ:GOOGL) chairman Eric Schmidt is raising hackles in financial circles right now. Big G dodged some $2 billion in 2011 tax costs by funneling international revenue through so-called "Double Irish" and "Dutch Sandwich" constructs. Speaking to Bloomberg yesterday, he defended the strategy: "I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate," he said. When pressured on this controversial view by Bloomberg's reporters, he took the next logical step. "It's called capitalism," he said. "We are proudly capitalistic. I'm not confused about this."

These tax savings are a product of curious details in Irish tax rules, which allow companies to claim an Irish address for some business purposes while maintaining overseas addresses for other reasons; they might claim revenue in the tax-free Cayman Islands or Bermuda for tax purposes. The Irish government still snags a reasonable 12.5% tax rate on whatever sales don't take the round-trip to Bermuda, but another quirk lets Google hide even this small slice by way of the Netherlands or Switzerland -- hence the colorful strategy names.

So Schmidt would say his Irish adventures are nothing but a sound, acceptable business strategy. It's perfectly legal thanks to the vagaries of international business accounting, and everybody should be doing it. Right?

But some multinational giants are not chasing Dutch Sandwiches. How do I know? SEC filings tell me so.

Diving into the filings
Google's latest 10-K filing explains that the company effectively works in two effective tax jurisdictions: The U.S. and Ireland. The rest of the world doesn't matter much. Indeed, the only two subsidiaries worthy of disclosure to the SEC are Google Ireland Holdings and Google Ireland Limited -- the two operations that add up to a classic Double Irish. The Limited operation sports 1,300 employees and $11 billion in 2011 revenue (which is a material portion of Google's non-U.S. total of $16.2 billion). The Holdings company appears to be the designated Caribbean outpost with no material assets or operations. Together, Google's tactics have lowered the effective tax rate to 21%.

It's well-known that Apple (NASDAQ:AAPL) employs a similar strategy. Cupertino's filings show three Irish subsidiaries and the Braeburn quasi-hedge fund located in Nevada. Apple's Irish games reduce the company's effective tax rate from the statutory 35% to a more agreeable 25%.

The Double Irish isn't totally unknown on the Dow Jones Industrial Average (DJINDICES:^DJI). Highly respected Dow component IBM (NYSE:IBM) reported effective taxes of just 24.5% last year. And what do you know -- Big Blue lists a single operating arm in major markets like France, Germany, and Japan, but two subsidiaries in Ireland.

The strategy is often described as ideal for tech companies, because they can easily shift sales of software and services across borders as necessary. But businesses with a more physical presence do it, too. Elsewhere on the Dow roster, heavy-machinery giant Caterpillar (NYSE:CAT) boasts two Irish subsidiaries under the guise of financial operations, as well as a 26.5% effective tax rate. So physical products don't necessarily stop the tax-reduction efforts.

However, the tactics do seem to break down in heavily regulated industries. Pharma titan Pfizer (NYSE:PFE) reported an effective tax rate of 31.5% last year, for example -- close to the American standard of 35%. It's not for a lack of effort, and Pfizer's sprawling operations do include several Irish offices, but there's only so much you can do when international watchdogs track every pill.

Is this evil?
Should you sell Google shares and stop using its products because the company is such a dirty little tax-dodger? I don't think so, and I own Google shares with a clean conscience.

In fact, you could argue that it's Google's duty to shareholders to minimize tax expenses by any legal means available. Not only that, but keeping more money in Google's own coffers gives the company more freedom to innovate, take risks, and generally build a stronger business. What's wrong with that?

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.